Compensation

What Is the Equal Pay Act?

Did you know that the Equal Pay Act (EPA) is actually a component of the Fair Labor Standards Act? The EPA was established in 1963 and signed into law by President Kennedy.

The EPA is administered and enforced by the Equal Employment Opportunity Commission (EEOC). According to EEOC’s website[i], the EPA “prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort and responsibility under similar working conditions.”

In theory, this should reduce the wage gap between the sexes.

In practice, this means that an employer cannot legally pay men and women different wages if they perform the same job at the same establishment, nor should it pay differing wages for different jobs that are substantially similar. The job requirements are what matters, not the title. In other words, the jobs need not be identical in name, simply equivalent in terms of skill, effort, and responsibility, and must be performed under similar conditions.

Under the EPA, there are additional items to consider. For example, labor groups or others who influence employer decisions cannot attempt to influence an employer to pay different wages to different sexes for the same work. This is illegal under EPA regulations.

It’s critical to note that all aspects of pay are taken into consideration when determining whether two groups are paid equally. If base pay is the same but one group gets better bonuses, for example, that would still be a violation of the law. It would also be a violation if only one group was allowed overtime, or only one group was given preferential benefits or other preferential treatment. Every type of pay, benefit, or reimbursement is under consideration—any difference that serves to make the wages unequal would count as a violation. Benefits like insurance, vacation allowances, and expense reimbursements are all part of the equation.

Exceptions to Equal Pay

While knowing how strict the law is, we should also note that there are a few permissible exceptions to the equal pay standard. For example, employers are allowed to pay differing amounts to account for seniority, how well the job is performed (merit), differing outputs among individuals (such as paying a standard piece rate where different people produce different quantities), or differences in quality of work. Total pay may vary for these reasons without violating the EPA.

Employers can make other similar exceptions within this spirit.

What Happens if an Employer Violates the EPA?

If an employee feels that an employer is in violation of the EPA, that individual has a couple of options. He or she may sue the company directly or may contact the EEOC to file charges. There is, however, a time limit for making a claim in either case: it must be made within 2 years of the unequal pay incident. There is also an extension if the violation is found to be willful—in that case, the claim must be made within 3 years.

When making such a case against an employer, the employee does not have to prove that the employer acted intentionally, only that the discrepancy existed. This is a lower hurdle than in many other laws.

If an employer violates the EPA, the violation is treated the same as if an employer had failed to pay minimum wage or overtime. It will typically be held liable for back wages owed, and sometimes a penalty as well.

Separately, it’s also very important for employers to bear in mind that if found guilty of unequal pay under the EPA, it’s likely the individual may also have a valid claim of sex discrimination under Title VII of the Civil Rights Act. This opens up the employer to possible judgments for compensatory damages instead of just back pay required by the EPA.

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.

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